Allergan Tells Analysts It Has Options in Valeant Fight

Allergan Inc., the maker of Botox, is telling Wall Street analysts that it has “other options” and could still tie up with another company, as it looks to defend itself from an unsolicited $46 billion offer from Valeant Pharmaceuticals International Inc.

Following a meeting with Allergan management, Sterne Agee’s analysts wrote in a research report Wednesday that “Allergan has more options and is in a stronger position than we’d originally assumed.”

The company cautioned that “rumors” that it was rebuffed by other potential suitors weren’t “fact,” said the Sterne Agee analysts, who said they were told it was still possible a so-called “white knight” suitor would ride to the rescue.

If Allergan decides to negotiate with Valeant, Sterne Agee said, the earliest that talks likely would happen would be in the second half of the year, following a release of clinical data for Allergan’s Darpin, a treatment for macular degeneration, an eye disease.

Earlier this week, Allergan Chief Executive David Pyott called Darpin “potentially the biggest single product opportunity that has ever faced the company.”

Sterne Agee analysts said they don’t believe the potential value with Darpin is reflected in Valeant’s current offer, adding that Allergan would rather have the clinical data before negotiating what it believes would be a fair price. The Sterne Agee analysts now think investors will support a bid only if it is worth more than $200 a share.

Allergan on Monday rejected a stock-and-cash offer from Valeant that was worth $152.89 a share at the time it was announced last month. Allergan said Monday it believed its own earnings and growth would exceed that price and said Valeant’s pledges to cut research-and-development spending would gut Allergan’s prospects.

Other analysts also wrote this week that Allergan’s presentations on its own plans for cost-cutting and new earnings forecasts have convinced them that Valeant needs to pay more. Leerink Swann analysts said Allergan’s new guidance implies the stock can get to $190 within a year and said Allergan could demand at least $180 a share in any deal.

Allergan shares closed Wednesday at just under $160, down about 1%.

Valeant already said Tuesday it would improve its offer and expressed disappointment that Allergan hadn’t yet engaged in discussions. And William Ackman‘s Pershing Square Capital Management LP, which owns 9.7% of Allergan’s stock and is working with Valeant on the offer, launched a shareholder referendum that will put to a vote the question of whether Allergan should begin negotiations.